Oil below $127, OPEC says world has enough supply
LONDON - Oil fell below session highs on Monday, after OPEC's president said the producer group would not call an early meeting and was unlikely even at its September gathering to boost supply as the world had enough oil.
U.S. light crude for June delivery was up 14 cents at $126.43 a barrel by 1406 GMT.
It closed at $126.29 a barrel on Friday after touching a record peak of $127.82 earlier that day after publication of a bullish price forecast from investment bank Goldman Sachs.
London Brent crude was down 8 cents at $124.91 a barrel.
Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said oil markets were well supplied and blamed high prices on speculation, a weak dollar and geopolitical problems.
"As for OPEC, indications shows that there is no shortage (of supply)," he said in Algiers
Khelil said OPEC would not meet before its next scheduled gathering in September and that this meeting was unlikely to result in an output increase.
"All in all, there is little indication that we are on the verge of a major price breakdown," said Edward Meir, analyst at broker MF Global.
He said a production increase from Saudi Arabia, revealed on Friday, was only "token" in terms of extra production.
Saudi Arabia has boosted oil output by 300,000 barrels per day to meet demand and compensate for other producers' lower output, Saudi Oil Minister Ali al-Naimi said on Friday.
U.S. President George W. Bush said on Saturday he was pleased with the Saudi move, but it was not enough to solve problems in the top energy consumer the United States.
But comments by OPEC oil ministers on Monday all highlighted that global oil supplies are enough to cope with demand.
Qatar oil minister Abdullah al-Attiyah also said there was no need to boost oil supplies to global markets. "The market doesn't need more oil," he said, pointing to a cut in forecast oil demand growth by the International Energy Agency.
"There is more oil in the market than consumers want," said Iraqi oil minister Hussain al-Shahristani.
Iraq aims to boost total oil exports to 2.3 million barrels per day from 2.0 million bpd by the end of the year, he said.
Oil prices have risen sixfold since 2002 and doubled since last year as rising demand from China and other developing nations has stretched spare production capacity, adding pressure on the U.S. economy already hard hit by a housing slump.
Diesel has taken centre stage in the world energy crunch as tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East triggered a boom in demand for middle distillates for electric generators.
Chinese demand for imported diesel is expected to rise even further in June after last week's earthquake disrupted gas supplies to major cities and as companies built stockpiles ahead of the summer Olympics.
Investment bank Lehman Brothers warned that record-breaking commodities prices that were drawing in hundreds of billions of dollars in new investments threaten to create an asset bubble.